The Unbelievable Amount Of Frac Sand Consumed By U.S. Shale Oil Industry

The U.S. Shale Oil Industry utilizes a stunning amount of equipment and consumes a massive amount of materials to produce more than half of the country’s oil production. One of the vital materials used in the production of shale oil is frac sand. The amount of frac sand used in the shale oil business has skyrocketed by more than 10 times since the industry took off in 2007.

According to the data by Rockproducts.com and IHS Markit, frac sand consumption by the U.S. shale oil and gas industry increased from 10 billion pounds a year in 2007 to over 120 billion pounds in 2017. This year, frac sand consumption is forecasted to climb to over 135 billion pounds, with the country’s largest shale field, the Permian, accounting for 37% of the total at 50 billion pounds.

Now, 50 billion pounds of frac sand in the Permian is an enormous amount when we compare it to the total 10 billion pounds consumed by the entire shale oil and gas industry in 2007.

As we can see in the graph above, the Permian Region is the largest shale oil field in the United States with over 3 million barrels per day (mbd) of production compared to 1.7 mbd in the Eagle Ford, 1.2 mbd at the Bakken and nearly 600,000 barrels per day in the Niobrara. However, only about 2 mbd of the Permian’s total production is from horizontal shale oil fracking. The remainder is from conventional oil production.

Now, to produce shale oil or gas, the shale drillers pump down the horizontal oil well a mixture of water, frac sand, and chemicals to release the oil and gas. You can see this process in the video below (example used for shale gas extraction):

The Permian Region, being the largest shale oil field in the United States, it consumes the most frac sand. According to BlackMountainSand.com Infographic, the Permian will consume 68,500 tons of frac sand a day, enough to fill 600 railcars. This equals 50 billion pounds of frac sand a year. And, that figure is forecasted to increase every year.

Now, if we calculate the number of truckloads it takes to transport this frac sand to the Permian shale oil wells, it’s truly a staggering figure. While estimates vary, I used 45,000 pounds of frac sand per sem-tractor load. By dividing 50 billion pounds of frac sand by 45,000 pounds per truckload, we arrive at the following figures in the chart below:

Each month, over 91,000 truckloads of frac sand will be delivered to the Permian shale oil wells. However, by the end of 2018, over 1.1 million truckloads of frac sand will be used to produce the Permian’s shale oil and gas. I don’t believe investors realize just how much 1.1 million truckloads represents until we compare it to the largest retailer in the United States.

According to Walmart, their drivers travel approximately 700 million miles per year to deliver products from the 160 distribution centers to thousands of stores across the country. From the information, I obtained at MWPWL International on Walmart’s distribution supply chain, the average one-way distance to its Walmart stores is about 130 miles. By dividing the annual 700 million miles traveled by Walmart drivers by the average 130-mile trip, the company will utilize approximately 5.5 million truckloads to deliver its products to all of its stores in 2018.

The following chart compares the annual amount of Walmart’s truckloads to frac sand delivered in the Permian for 2018:

To provide the frac sand to produce shale oil and gas in the Permian this year, it will take 1.1 million truckloads or 20% of the truckloads to supply all the Walmart stores in the United States. Over 140 million Americans visit Walmart (store or online) every week. However, the Industry estimates that the Permian’s frac sand consumption will jump from 50 billion pounds this year to 119 billion pounds by 2022. Which means, the Permian will be utilizing 2.6 million truckloads to deliver frac sand by 2022, or nearly 50% of Walmart’s supply chain:

This is an insane number of truckloads just to deliver sand to produce shale oil and gas in the Permian. Unfortunately, I don’t believe the Permian will be consuming this much frac sand by 2022. As I have stated in several articles and interviews, I see a massive deflationary spiral taking place in the markets over the next 2-4 years. This will cause the oil price to fall back much lower, possibly to $30 once again. Thus, drilling activity will collapse in the shale oil and gas industry, reducing the need for frac sand.

Regardless, I wanted to show the tremendous amount of frac sand that is consumed in the largest shale oil field in the United States. I calculated that for every gallon of oil produced in the Permian in 2018, it would need about one pound of frac sand. But, this does not include all the other materials, such as steel pipe, cement, water, chemicals, etc.

For example, the Permian is estimated to use 71 billion gallons of water to produce oil this year. Thus, the fracking crews will be pumping down more than 1.5 gallons of water for each gallon of oil they extract in 2018. So, the shale industry is consuming a larger volume of water and sand to just produce a smaller quantity of uneconomic shale oil in the Permian.

Lastly, I have provided information in several articles and videos explaining why I believe the U.S. Shale Oil Industry is a Ponzi Scheme. From my analysis, I see the disintegration of the U.S. shale oil industry to start to take place within the next 1-3 years. Once the market realizes it has been investing in a $250+ billion Shale Oil Ponzi Scheme, the impact on the U.S. economy and financial system will be quite devastating.

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How much water is used/needed to produce that shale oil? I ask many environmentalists/scientists/engineers are saying the world is heading for a nightmarish water shortage in the coming decades if not years.

Nothing crazy – Steve’s estimates are about right. Doesn’t have to be clean water; brackish would often suffice. Watering of golf courses takes more water than fracturing (may not be most recent).
If not recycled (often there are no economic incentive to do it or worse, incentives not to recycle) – it may be an issue with disposal. When large volumes are pumped into disposal wells – it may create some seismisity which may be felt at surface
(microseismic events during shale fracs are usually sub zero to <~2 on Rihter scale, unless there are faults activation).

I think our water resources will come back, once the shale/frac industry collapses. Why, do you ask I suspect this? My new Camry averages around 44 MPG. This is a full size sedan, no piddley 2-seater with a cigarette sized trunk. It should be terribly obvious that a government agency will continue feeding the oil industry useless, green, paper rectangles UNTIL, either the world moves on to a better car that uses less resources, or American labor stops accepting dollars.

when FDR got out of law school he went to work for rockafeller at standard oil.rockfeller came up with the federal reserve also known as the adritch plan after his father in law senetor aldritch .FDR took the gold coins out of circulation and put them into Ft. Knox.In violation of the constittution read paper money in a=z quotes.com

Steve, here is an excerpt from Art Berman and Chris M’s latest podcast

Art Berman: “If you took Bakken or the Eagle Ford and you just stopped drilling any new wells, you just have 10,000 or 12,000 wells or more. In the Bakken, I think you have close to 15,000. The Eagle Ford has maybe 12. You have a gazillion wells that are producing. You just said okay, we are not drilling any new wells. Those entire fields would decline 30% a year. It is 30%. It does not mean that a new well is going to decline at 30%. The base production and the field itself is. Basically, in three and a half years it is producing nothing.”

Chris Martenson: “Wow.”

Art Berman: “Wow, that is sobering. That is the part of the shale story that we do not want to think about. That is that the decline rates are four or five times higher than a conventional well. We kind of all know that. We even acknowledge it. But we do not really feel it because they are drilling so many wells all the time. I mean the Bakken has 60 rigs working in it right now. Here is a play that I am telling you is not going to grow anymore. Yet, there are 60 drill rigs running all the time in that play. There are always new wells. I showed a graph just recently. The North Dakota agency that reports on production, they release their data every month. There is a record number of wells in the Bakken. Yet, every month, the production declines. Today, production is 5% less than it was in December 2014, which was the peak. There are 4000 wells more now than there were then. There is a really good measure of what that decline rate looks like. You have to drill. You have to have a quarter more or 4000 wells more than you did three and a half years ago, and you still cannot get to the same level of output.”

Yes, I listened to Art’s interview and I agree with him. However, my analysis suggests the situation is far worse than what Art is saying. Also, Art is still looking at SUPPLY & DEMAND forces only in determining the oil price.

When the $2 trillion in Volatility and Implied Volatility, $4 trillion in Global Oil & Gas Bonds-debt and $5 trillion of Global ETF’s start to unravel, the oil price will start to head back to $30.

The Hill’s Group essay on Thermodynamics Collapse is one of the most important pieces of research I’ve seen. And I think they nailed the actual point of thermodynamic collapse, it’s the point when the VALUE of a barrel of oil drops off a cliff. A very important marker.

The Hill’s Group’s mistake is, they tried to estimate that point to price. It’s a mistake I’ve seen repeatedly. A pound, an acre, a galllon, a millimeter, a watt – all have something in common. Forms of measurement. A killawatt ten years from now will be the same as a killawatt ten years ago. Not so with the dollar (unless we define it as 371.25 grains of silver, but we don’t).

No one, scientificly speaking, No one can say for certain what the price of something will be in the future, measured in FRN dollars. It is not a fix unit of measure.

But the Hill’s Group’s essay is no less important. So they see the world through green colored glasses; the sharpest minds at The Oil Drum make the same mistake. The Hill’s Group still nailed the inflection point. Thermodynamic collapse should be concurrent to a critical drop in valve for oil, as a ratio to finished product. So my forecast is that we will see hyperinflation of the dollar.

This is only a forecast. The price could stay the same, go up, go down, or even go away; because unlike a light year, the dollar is not a fixed unit of measure. Based on my observations, this will precede, or mark, the currency event.

Hi Steve it will get even more crazy as there aree plans in the motion to start frack for Gold and which other commodity they find suitable for this technology. You can see now more clearly why the usa is in the middle east just to get their hands on the remaining cheap energy resources in this world.

I frac for living but I haven’t heard of any projects where hydraulic fracturing is used for gold extraction or any plans of it. There is insitu leaching used for uranium – you can crack the rock of not permeable enough. Gold is a) very disperse and b) very inert, i.e. hard to dissolve. You’ll need to circulate heaps of aqua regia or cyanide and EROI of shale oil would dwarf efficiency of your process…

Not to the shale industry – all recovery is based on expansion of oil/compaction of the rock; there is no pressure support of water flood. Recovery rates are ~10% of OOIP.
In conventional, recovery rate is a product of pore volume displacement (addressed by Enchanced Oil Recovery method such as bacterial flood sensationalised in your link), vertical and lateral sweep efficiency. Assuming each of about 70%, typical RR would by .7^3 = 34%. Even if you can get all oil out of the pores, you still going to leave ~half of OOIP in the ground, unless sweep issue is addressed. Or if you producing from Cantarell or Arab D where permeability is in Darcy range and fluid level moves nicely (sort of; there are conning issues; natural fractures etc).
Do your own research before buying into what looks like pump and dump scheme.

Last year my brother and I were traveling back from Utah and traversed between Carlsbad New Mexico to Van Horn Texas on Highway 285 between 1am and 4am. The horizon on each side to the road were brilliantly lit up by flares and the drilling rig flood lights the whole way. Vacuum and tanker trucks were traveling 70 to 80 miles an hour like it was a raceway. The asphalt roads were almost pulverized to grave. The roads are in desperate need of repair. We had a full appreciate as to the scale of fracking in West Texas.

This is another way to consume energy but more subtle. The roads that once in a time of better EROI were built are now being damaged by frackers. Of course if the cost of building these roads was added to fracking costs then fracking companies would be even deeper in the red. But so works the cannibalization of the oil industry, they have to destroy the infrastructure in order to keep the system running a little bit longer, even if in the end everyone is worse off. It’s the shortermism criticized by Jörgen Randers which is crippling our world.

As bad and seemingly illogical as it is to pump so much money, material and resources into fracking, the truth of the matter is that if it weren’t for fracking, the global economy would have already crashed and burned and we would all be living in a post-apocalyptic world. Fracking has done an excellent job of extending the timeframe of the inevitable economic collapse up to this point, and probably another year or two longer. It provided jobs, it fueled industry, it kept the engine of energy production clanking along. It bought time.

Pretty much agree with what you post.
“if it weren’t for fracking, the global economy would have already crashed and burned and we would all be living in a post-apocalyptic world.”
Certainly the U.S. economy would have crashed; whether it would have gotten to post-apocalyptic or not who knows. Maybe not across the globe, but in the U.S. it would be very bad.
The way the powers that be run things, they want an oblivious populous who really believes the crap like low unemployment figures that recently came out, and that everything is fine long term. Just a few normal bumps in the road.

I considered whether or not “post-apocalyptic” might be a little too strong an adjective, especially given the images offered up in movies and TV shows that portray “post-apocalyptic” scenarios. Maybe it won’t be “mad max” style post-apocalyptic, but close in my opinion. Banks failing, pension funds bankrupt, mass unemployment, global trade stopped dead, food and other deliveries severely disrupted, no gas/diesel, martial law for sure. Then comes the apocalypse, with this definition: “an event involving destruction or damage on an awesome or catastrophic scale.” Few days later, whoever is left will be living in a post-apocalyptic world!

Tony, exactly right. I think Steve should dedicate an article to a simple explanation why the price of oil will go to ~$30 per barrel when the fracking industry collapses. He is correct insofar as the potential for collapse, but how this significant hole in the supply side will lead to a more than 50% reduction in price is an interesting concept.

Steve’s comment above refers to demand destruction caused by blowing up of volatility complex; with a caveat of potential surge of the oil price. I’m on board with that; spike in the oil price may actually be that last straw. As for oil to cost less because it takes more energy to extract it – that part I’m yet to comprehend. In my simple mind if something cost more to produce – that form a base, just like cost of gold production (or silver and platinum, which is allegedly produced below its cost).
Baring massive discovery(s); we’ve reached peak cheap oil production few years back – buckle up for the ride; there is no economic/practical alternative to oil for transportation yet. Meanwhile trading 5 cents worth of sand to $1.5 in oil may seem to be a good business – this may change soon as investors want to get paid and service companies starting to recover some of the 40% “cost savings” they’ve being subjected to.

“As for oil to cost less because it takes more energy to extract it – that part I’m yet to comprehend.”

Gail Tverberg from https://ourfiniteworld.com has the best and easiest explanation. Her explanation goes like this: the cost of oil is too low for the “energy producers” and too high for the “consumers”. So the price of oil needs to go up for the energy producers to get it out of the ground but the average consumer can’t afford to buy it. That’s why we have been seeing price swings and when oil gets too high it hurts the economy because the consumer has to use their hard earned money on the price of gas at the pump instead of feeding the economy i.e. “consuming”.

So in essence at that point oil becomes worthless because no one will buy it and if it goes too low the entire global economy is at risk of collapsing along with industrial civilization. I think that’s the point that The Hill Group is trying to make as well.

what you describing is classic boom and bust cycle we are very familiar with. Not unique to oil industry – “best cure of low silver prices is low silver price” etc.
Debt-based world economy is destined to collapse and it won’t happen because of energy, although cost of energy may be tipping point – Fed may get inflation in spades as cost of production and transportation of goods will inevitably crank up the cost of goods and living.
Disagree on your second point – collapse of particular energy nation may send shock waves to oil markets but likely to be accommodated. Case in point – Venezuela, Libya, Iran. Saudi or Russia would be harder to swallow but it is still ~10% of supply – it may be managed via change of consumer’s habits in reaction to increased price. Ford may have to slash its trucks division then…

I’ve tried to sort this counter-intuitive logic out myself.
It boils down to the fact that classic economics, even the Austrian school, assumes that a product or service is unlimited as long as people are willing to “pay” more for it. Supply and demand. However, this traditional school of thought runs aground when suddenly, the supply depends not whether people are willing to “pay” more for it (whether by borrowing, paying more with gold or fiat or some other financial gimmickry the Energy returned on investment or plain EROI), but gradually, supply will depend on the availability of the existence of the very thing you are are trying to produce! You need another barrel of oil to get this oil supply out of the ground. This is a new paradigm that supersedes traditional economics. It is based on the thermodynamic concept or Energy Returned on Energy Invested. (EROEI) Note that this is different than the financial law of economics which is most certainly at play here as well, but eventually, the EROEI will, by this Hill argument I think, be the controlling factor. EROI will be a subset of EROEI.

Once this EROEI takes over, and that drillers can’t even get a barrel out of the ground for every one expended in running the pumps, the trucks, the refineries, etc. then the game is up.

This decrease in oil availability has a multiplier effect on the economy so that even though the amount of oil that can be pulled out of the ground based on EROEI is decreasing, the impact of that that oil scarcity has on the economy is tenfold. All self-amplifying commerce theoretically collapses. Yes, you can still get some oil out of the ground, but it is not enough to meet the threshold amount needed to maintain the economy. The whole economy grinds to a halt.

The rate of collapse of the vulnerable economy is greater than the rate of collapse of the oil production. As Steve says, the oil isn’t worth anything because there is not enough of it left to sustain a complex economy.

Very difficult to conceptualize I know, and my criticism of Steve would be why he doesn’t distinguish EROI from EROEI. Perhaps this would help clarify this theory further.

My understanding – there is a fundamental issue with Hill’s group assumption oil is a primary source of energy. It is mostly used in transportation and even if we have to consume more energy to produce it – it still may be done, simply because airplane won’t goo too far on batteries just yet (yes, I’m familiar with round-a-globe solar-powered flights; I’m talking commercial application). Example: nuclear energy may be used to generate steam to produce heavy oil in Canada. Solar already used for the same purpose in Oman. Electric pumps (GE) may be used to frac; power may come from coal or nuclear.
When cost-effective scalable energy storage solution become available – I may have to start looking for another job. Perhaps not right away – ERoEI of Oil & Gas still beats that of solar and wind.

I don’t see a conflict between the Hill’s Group reasoning and Austrian Economics, generally speaking. Say’s Law should come into play with demand destruction. And I don’t see the Hill’s Group report as fundamentally flawed, it’s fundamentally solid as hell. Just a minor discrepancy on Price.

There is so much original insight in the HG report. Was rereading tonight. The HG actually goes out of their way to get the ‘price’ portion right, staring at section 6.0. But even later on page 49, “unlike the dollar, an energy unit is a quality that does not change with time.” They have nailed critical markers; page 33/34, 2012 as “the year when it required one half of the energy content of petroleum to produce the petroleum and its products.” And page 37, the Dead State EROI ratio.

What is key is that the dollar is de facto backed by oil (and confidence, derivatives, war, electrons, bat wings, gizzards, etc). So simply approaching the Dead State becomes the event horizon for the dollar. With apologies to Richard Russell, it’s Inflate, then Die. The Dead State destroys the dollar, and with it future pricing. But the lost value they nailed.